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RealTime Economic Issues Watch

In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.

Recent Posts

Ten Lessons from the Scottish Referendum

by | September 23rd, 2014 | 08:57 am

The 55 percent majority that rejected Scottish independence was perhaps not so lopsided as to banish all Scottish nationalist dreams of another vote someday. But it was more decisive than many opinion polls had predicted. At least 10 lessons can be drawn from the process. Risk aversion and fear of the unknown works among rich […]

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Mapping Europe’s Banking System: Most Small Banks Are German

by | September 22nd, 2014 | 10:20 am

A well-known limitation of Europe’s banking union is the fact that most banks in the euro area will escape the direct supervision of the European Central Bank (ECB) and the Single Resolution Board that will address insolvent banks next year. Indeed, the ECB’s recently published mapping [pdf] identifies 3,652 banks in the euro area, of […]

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Corporate Taxation: Historic Reform Awaits 2017

by | September 19th, 2014 | 09:44 am

In summer of 1975, J. L. Kramer and I published an article in the International Tax Journal entitled “Higher U.S. Taxation Could Prompt Changes in Multinational Corporate Structure.” Nearly four decades later, our Delphic predictions may be coming true—evidenced by the widespread phenomenon of corporate “inversions.” Inversions—whereby US corporations acquire a legal citizenship abroad by […]

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Rebuttal to Stiglitz on Scotland: Reality of Independence Is Frightening

by | September 16th, 2014 | 01:04 pm

The overwhelming majority of macroeconomists who have commented on the impact of Scotland leaving the United Kingdom have said that the economic costs to Scotland so doing would be very high—I have made this case as well. This professional consensus includes such notable progressives or Keynesian commentators as Paul Krugman and Simon Wren-Lewis. Joseph Stiglitz, […]

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Alibaba IPO Underlines Rise of Chinese Private Sector

by | September 9th, 2014 | 10:11 am

On Friday, September 5, Alibaba Group filed details about its forthcoming initial public offering (IPO), suggesting a mid-range valuation of US $155 billion. This would make the Hangzhou-based web retailer the most valuable listed private-sector company headquartered on the Chinese mainland, ahead of its Shenzhen-based online rival Tencent Holdings. Alibaba’s coming of age underlines a […]

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Did Putin Win in East Ukraine?

by | September 8th, 2014 | 09:47 am

Did Putin win in east Ukraine? The short answer is “yes,” at least on the geopolitical chessboard. In economic terms, the victory will prove costly to Russia. To understand Putin’s victory, it’s helpful to reach back 80 years to the League of Nations sanctions imposed against Italy in 1935, in a futile effort to reverse […]

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The ECB Throws down the Gauntlet

by | September 5th, 2014 | 02:22 pm

The European Central Bank (ECB) surprised financial markets on September 4 by announcing an interest rate cut of 10 basis points, a new program to purchase asset-backed securities (ABS) in the nonfinancial sector, and another round of purchases of covered bank bonds. The ECB was responding not only to the recent deterioration in the European […]

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How Markets and Soccer Could Impede Scottish Independence

by | September 4th, 2014 | 12:37 pm

Recent polls suggest that support for Scottish independence is growing, and the once comfortable lead by opponents has diminished with the approach of the September 18 referendum. The pro–Great Britain supporters lead only 48 to 42 percent, with 10 percent undecided. Suddenly, a victory for the Scottish independence camp no longer seems implausible, and financial […]

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A Sensible Step to Mitigate Sovereign Bond Dysfunction

by | August 29th, 2014 | 04:57 pm

Lingering fallout from the debt crises in Argentina and Greece exposed serious flaws in the sovereign debt restructuring process: Small groups of creditors were able to extract preferential treatment and cause serious disruptions for everyone else. On August 29, 2014, the International Capital Market Association (ICMA) released a new set of model clauses for foreign […]

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Draghi Yields to Reality in Jackson Hole

by | August 29th, 2014 | 02:31 pm

On August 22 in Jackson Hole, Mario Draghi, president of the European Central Bank (ECB), achieved an important breakthrough in the thinking of euro area authorities. He did so by acknowledging for the first time that inflation expectations could become unanchored from the central bank’s 2 percent target, declining dangerously below that level and requiring […]

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